Be wary of unrepresented parties at mediations

Mediations at which parties are unrepresented or not represented by lawyers are fraught with risk. Even with legal representation mediations are stressful, particularly where the mediation is only fixed for a half day and there is pressure to avoid long winded discussions about the facts. Experienced mediators invariably offer unrepresented parties an adjournment so that legal advice can be obtained.

VCAT recently decided case in which landlords sought to set aside terms of settlement agreed at a half day mediation conducted by the Small Business Commissioner. In Wong v Hook Line and Sinker Fish and Chips Pty Ltd [2013] VCAT 263 the landlords sought to have the terms of settlement set aside on the grounds of undue influence or duress by the mediator and a barrister.

At the mediation the parties had been in dispute about whether the tenant was being required to pay “key money” under a lease contrary to s.23 of the Retail Leases Act 2003. The terms of settlement required the parties to appoint a valuer to determine the market rent.

The landlords were not represented by a lawyer at the mediation but were represented by an advocate who held himself out as an expert in retail tenancy matters and who prepared written submissions. The mediator was highly experienced and was accompanied by a trainee mediator.

The tenant was represented by an experienced barrister. The mediator offered the landlords the opportunity to adjourn the mediation to enable them to obtain legal advice but the offer was declined. The landlords subsequently refused to appoint the valuer to determine the market rent and commenced a proceeding alleging that the terms of settlement had been obtained by undue influence or duress.

At the hearing the mediator, the trainee mediator, the tenant’s barrister at the mediation, representatives of the tenant, the landlords and the landlords’ advocate all gave evidence. The Tribunal rejected all of the the landlords’ claims. An application for leave to appeal has been filed.